Opinions
Mark Grammer
China Mobile Hong Kong
CHL-N
DON'T BUY
Mar 22, 2018
Stock price when the opinion was issued
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This is usually a direct beneficiary for Europeans wanting exposure to China. In the last while, we have seen the opening up of the Chinese market via the Hong Kong market. The strategy has put some capital into other major Chinese corporations. The company is cheaper now than it was during the global financial crisis. They paid a special dividend earlier in the year, when they sold off their towers. This typically tends to band trade higher in an upward direction. At the moment it’s at the bottom of its low-end range. It has more cash than debt, so the dividend is a very safe. Dividend yield of 3.6%. (Analysts’ price target is $68.70.)
5G is coming to a billion people in China, and they only have half a billion signed up so far. This is interesting because it is a domestic Chinese stock that pretty much has a built-in market without competition. This is more of a blue-chip yield play, as opposed to expectations of a lot of growth, but they may start to see better times ahead. This will put more smart phones in the hands of rural Chinese. Go slowly into this, because you never know what could happen in the Chinese stock market.
This is the major mobile company in a large market. They are experiencing the same problem that other large players are facing: everyone already has a smartphone. There is growth opportunity in China, but he expects to see average revenue per subscriber slowing down. He thinks the big run in that sector has come and gone and is being replaced by Netflix-type companies. In China, there is also a lot of pressure on pricing. Around the world, the mobile communications providers are all becoming more mature businesses.
A name that they have looked at over time. It is a stock that has not done much for a long time. China is a big market, and it should benefit from 5g rollout but it has not been reflected in the stock price. There are safer investments elsewhere, such as Verizon.
This is a very good company, well-positioned, but it is facing pricing pressure. The market share is around 80% so there is not much room for growth. Their recently-released earnings were decent. They increased the dividend a little. This company, like other large mobile operators, is more a dividend play than a growth opportunity. There stock has been drifting lower this year because there is not much interest in the name at this time.